Gen Z is crushing previous generations when it comes to saving for retirement. Young people today are starting to save almost as soon as they enter the workforce, which could be as much as a dozen years sooner than Baby Boomers. According to data from a Northwestern Mutual study, Gen Z is saving for retirement at an average age of 22.
In comparison, Millennials began saving at age 27, Gen X at 31, and Boomers typically started at 37. Many Gen Zers believe they will live to 100 years old. The study found that 30% of Gen Z and Millennials think they can hit the century mark compared to 22% of Gen Xers and 21% of Boomers.
This belief is supported by studies showing that both Gen Z and Millennials prioritize healthy eating, exercise, and mental health. Gen Z also wants to retire earlier than other age groups. The Northwestern Mutual study found the younger crowd wants to quit the rat race by 60.
Gen Z’s early retirement planning
That’s more than four years earlier than Millennials expect to retire, seven years sooner than Gen X, and 12 years ahead of Boomers. The average retirement age is currently 65.
These attitudes influence Gen Z’s work ethic. Because they value a healthy mind and body, they’re not willing to subject themselves to mindless work for little gain. Gen Z faces tremendous financial stress unlike previous generations.
With the average price of a house costing over $412,000 and the average rent at $1,562 per month, many in Gen Z can barely afford rent, let alone save for a house. This, along with car expenses, student loans, and daily living costs, explains why they prioritize long-term financial planning. It’s beneficial that Gen Z is saving earlier for retirement.
By starting early, making regular contributions, and leveraging compound interest, they are well-positioned to meet and even exceed their retirement goals. This approach can turn even small amounts of money into substantially larger sums over time.
